Compass Bank v. Eager Rd. Assocs., LLC

Decision Date08 February 2013
Docket NumberCase No. 4:12–cv–01059.
PartiesCOMPASS BANK and Vectra Bank Colorado, N.A., Plaintiffs, v. EAGER ROAD ASSOCIATES, LLC, Alan R. Skop, Don C. Musick III, Adolphus A. Busch IV, City Of Brentwood, Missouri, and UMB Bank, N.A., Defendants.
CourtU.S. District Court — Eastern District of Missouri

OPINION TEXT STARTS HERE

Mia K. Della Cava, Neil L. Arney, Kutak Rock, Denver, CO, M. Courtney Koger, Kutak Rock, LLP, Kansas City, MO, for Plaintiffs.

Evan Z. Reid, William E. Benoist, Jr., Winthrop B. Reed, III, Lewis Rice, Brian A. Lamping, Catherine A. Schroeder, W. David Wells, Thompson Coburn, LLP, Patrick T. McLaughlin, Ryan C. Hardy, Spencer Fane, LLP, St. Louis, MO, for Defendants.

MEMORANDUM AND ORDER

JEAN C. HAMILTON, District Judge.

Presently pending before the Court is Defendants' Motion to Dismiss Plaintiffs' First Amended Complaint. (Doc. No. 118.) The matter is fully briefed and ready for disposition.

I. BACKGROUND

In this action, Plaintiffs Compass Bank and Vectra Bank Colorado, N.A. (Plaintiffs) seek remedies in connection with the alleged breach of a contract and fraudulent inducement of that contract by Defendants Eager Road Associates, L.L.C., Alan R. Skop, Don C. Musick III, and Adolphus A. Busch IV (Defendants). The contract has two parts—a Settlement Agreement and a Mutual Release. The contract was agreed to by Plaintiffs and Defendants in September 2011. It was intended to end litigation between the parties, commenced in February 2010, arising out of a real estate development project in Brentwood, Missouri, and specifically out of the financing of that project. (First Amended Complaint (Doc. No. 107), hereinafter “Compl.” ¶¶ 18–19.) Elements of the litigation have been before the Circuit Court of St. Louis County, Missouri and before this Court. The litigation played out, ultimately, in state court in a matter captioned Eager Road Assocs., L.L.C., et al. v. Compass Bank, et al., Case No. 10SL–CC00605, after this Court, in August 2011, dismissed the parties' disputes before it in favor of the state court action. See Compass Bank v. Eager Road Assocs., L.L.C., et al., No. 4:10–cv–00413 (Doc. No. 222).

The Settlement Agreement and Mutual Release have not ended the parties' disputes, as the parties are once again before this Court. The parties' current dispute concerns, at base, two provisions of the contract, contained within the Settlement Agreement, which Plaintiffs assert, require Defendants to tender to Plaintiffs (1) a $4.15 million “Developer Settlement Payment” and (2) a letter of credit—the “Developer Letter of Credit”—in the amount of $1.35 million payable to Plaintiffs. (Compl. ¶ 22.) Defendants' aforementioned payment obligations are conditions precedent to setting in motion a bond refinancing plan that is the end goal of the contract. (Compl. ¶ 23–25.) According to Plaintiffs, Defendants have failed to meet these payment obligations—the “only material steps remaining” to complete the bond refinancing contemplated under the contract. (Compl. ¶ 29.)

Plaintiffs have asserted four claims against Defendants: (1) specific performance of the parties' contract (Count I); (2) breach of the parties' contract (Count II); (3) breach of the covenant of good faith and fair dealing (Count III); and (4) intentional misrepresentation and fraudulent inducement (Count IV). Defendants have moved to dismiss all four claims against them. Because the gist of this action sounds in contract rather than tort, Defendants' motion will be granted in part and denied in part, for the reasons discussed below.

II. JURISDICTION

Judgment in the parties' state court action was entered on September 27, 2011, noting dismissal of that action by the parties. Defendants suggest that, in order to seek enforcement of the contract, Plaintiffs were obligated to proceed via a collateral action in state court. See Memorandum in Support of ERA Defendants' Motion to Dismiss First Amended Complaint (Doc. No. 118–1, hereinafter Defendants' Opening Br.”) at 18–19. Defendants are incorrect. Plaintiffs could have brought a collateral action in state court ( see generally Garrison v. Nichols, 908 S.W.2d 373 (Mo.Ct.App.1995)), but this was not required. The Court has jurisdiction over the present dispute because, although it concerns an agreement to end litigation in state court, the amount in controversy exceeds $75,000 and there is complete diversity between the parties. See, e.g., Leatherworks P'ship v. Berk Realty, 247 Fed.Appx. 676, 681 (6th Cir.2007) (citing Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 378, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994)) (where diversity requirements are met federal court may hear action for breach of agreement that settled state court action).

III. LEGAL STANDARD

In ruling on a motion to dismiss, the Court must view the allegations in the complaint liberally, in the light most favorable to the plaintiff. See Eckert v. Titan Tire Corp., 514 F.3d 801, 806 (8th Cir.2008) (citing Luney v. SGS Auto. Servs., 432 F.3d 866, 867 (8th Cir.2005)). The Court “must accept the allegations contained in the complaint as true and draw all reasonable inferences in favor of the nonmoving party.” Coons v. Mineta, 410 F.3d 1036, 1039 (8th Cir.2005) (citing Young v. City of St. Charles, 244 F.3d 623, 627 (8th Cir.2001)). To survive a motion to dismiss, a complaint must contain “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). While a complaint attacked under Rule 12(b)(6) does not require detailed factual allegations, a plaintiff's obligation to provide the grounds of his entitlement to relief “requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555, 127 S.Ct. 1955.

Further, Rule 9(b), applicable to the fraudulent inducement claim here, requires that circumstances constituting fraud be pleaded with particularity. Fed.R.Civ.P. 9(b). Thus, a party complaining of fraud must allege “such matters as the time, place, and contents of false representations, as well as the identity of the person making the misrepresentation and what was obtained or given up thereby.” Schaller Tel. Co. v. Golden Sky Sys., Inc., 298 F.3d 736, 746 (8th Cir.2002) (citations omitted). This requirement is designed to enable defendants to respond “specifically, at an early stage of the case, to potentially damaging allegations of immoral and criminal conduct.” Abels v. Farmers Commodities Corp., 259 F.3d 910, 920 (8th Cir.2001). The level of particularity required depends upon, inter alia, the nature of the case and the relationship between the parties. Payne v. United States, 247 F.2d 481, 486 (8th Cir.1957). Rule 9(b) should be read “in harmony with the principles of notice pleading.” Schaller Tel. Co., 298 F.3d at 746 (quoting Abels, 259 F.3d at 920).

IV. DISCUSSION
A. Breach of Contract and Specific Performance (Counts I and II)

To state a cause of action for breach of contract under Missouri law, a plaintiff must allege: (1) the making and existence of a valid and enforceable contract, (2) the right of the plaintiff and the obligation of the defendant thereunder, (3) a violation thereof by the defendant, and (4) damages resulting to the plaintiff from the breach. See Gilomen v. Sw. Mo. Truck Ctr., Inc., 737 S.W.2d 499, 500–01 (Mo.Ct.App.1987) (citing U.S. Suzuki Motor Corp. v. Johnson, 673 S.W.2d 105, 106 (Mo.Ct.App.1984); Johnson v. Great Heritage Life Ins. Co., 490 S.W.2d 686, 691 (Mo.Ct.App.1973)).

Plaintiffs and Defendants agree that the first element—a valid and enforceable contract—is satisfied. See ERA Defendants' Reply in Support of Their Rule 12(b)(6) Motion to Dismiss Plaintiffs' First Amendment Complaint (Doc. No. 142) at 13 n. 3 (“ERA's position with respect to the Settlement Agreement is [that] the Parties all entered into a valid and enforceable settlement agreement, which is binding upon them, including Plaintiffs and ERA.”) (emphasis added); Compl. Exh. B. at 1 (“Each of the Parties hereby acknowledges and agrees to the terms and conditions set forth in the Settlement Agreement, and each Party agrees that the Settlement Agreement is binding and enforceable against it or him.) (emphasis added). Plaintiffs proceed to satisfy the remaining elements, alleging that (1) Defendants agreed to tender the Developer Settlement Payment and Developer Letter of Credit to Plaintiffs (Compl. ¶¶ 22, 25), (2) Defendants have “failed and refused to make the Developer Settlement Payment or to deliver the Developer Letter of Credit” (Compl. ¶ 26); 1 and (3) Plaintiffs have been damaged in not less than the combined amount of the heretofore unpaid Developer Settlement Payment and the Developer Letter of Credit (Compl. ¶ 40).

Although a substantial portion of Defendants' briefing is devoted to the meaning of Fed.R.Civ.P. 8 in the wake of Twombly and Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009), the Court is not persuaded that pleading a simple breach of contract claim has become a rigorous undertaking or an exact science. Plaintiffs have stated a cause of action for breach of contract under Missouri law. See, e.g., BJC Health Sys. v. Columbia Cas. Co., 348 F.3d 685, 689 (8th Cir.2003) (“The allegations that BJC had a binding agreement with Columbia, that Columbia breached the agreement, and that BJC suffered injury as a result of the breach, are sufficient to satisfy the requirements of Rule 8(a).”).

Plaintiffs seek alternative remedies in connection with their breach of contract claim—specific performance (Count I) and money damages (Count II). There is no meaningful dispute between the parties whether Plaintiffs' breach of contract claim, if pleaded adequately, may entitle them to damages. Defendants contend forcefully, however, that Defendants are not entitled to specific performance. See Defendants'...

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